Oil and gas firm Oilexco North Sea (ONS) is poised to go into administration, leaving a questionmark over 50 jobs in Aberdeen.
Canadian parent Oilexco announced on Hogmanay that its only wholly-owned subsidiary intended to file petitions for administration “as soon as reasonably practicable”, but most likely early next week.
The group, whose shares slumped 60% in London following the news, said it had run out of options for ONS after bankers refused to provide further funding.
Oilexco’s problems follow repeated warnings from professional services firm Ernst and Young (E&Y) that some firms operating in the North Sea could become casualties of the global recession as funding dries up.
In November, Aberdeen-based E&Y oil and gas partner Alec Carstairs said the situation for many companies was “nearing critical”.
But the downfall of some firms is widely expected to create acquisition opportunities for bigger players in the North Sea, offering hope for the ONS staff now facing an uncertain future.
Andrew Reid, Aberdeen-based managing director of energy consultant Douglas-Westwood, said: “What is happening at Oilexco is not all that surprising.
“It is a good example of a business that is fundamentally sound but problems in the financial sector are inhibiting its ability to raise further capital.”
Mr Reid said operators were being hit on two fronts, low oil prices and rising costs, forcing down profit margins.
He added: “We could see a number of companies in the UK sector of the North Sea being forced into administration if they cannot re-finance.
“However, companies that are in a stronger financial position will be looking at the likes of Oilexco as an attractive opportunity to buy and I suspect a deal will be struck quite quickly.”
Jake Molloy, regional organiser for the offshore energy branch of the RMT union, said: “I would hope a buyer can be found soon. I wouldn’t want to see any company going to the wall.”
ONS activities are focused on the Outer Moray Firth and Central Graben areas of the Central North Sea.Production assets include the Brenda/Nicol, Janice/James and Balmoral/Stirling/Glamis fields, the Nelson field and platform, and the Balmoral floating production vessel.
Discoveries include Black Horse, Bugle, Huntington, Kildare, Ptarmigan, Shelley and Sheryl.
ONS also has exploration acreage interests in Alpha/Delta, Bluebell, Caledonia, Catcher, Constance, Danica, Halibut North, Laurel Valley, Mallory, Manhattan, Moth, Oddjob, Sparrow and West Athena.
Calgary-based Oilexco was last month offered a £31.25million bridging loan by a Royal Bank of Scotland-led banking syndicate, but the company wanted extra cash to cover its short-term commitments and capital-investment programmes.
Investment banks Morgan Stanley and Merrill Lynch are helping in a strategic review aimed at either finding fresh funds or bringing about the sale of the group or its interests.
Oilexco said yesterday that several parties had already shown interest in buying ONS, or “all or substantially all” of its assets.
Administrators would continue efforts to keep the business operating as a going concern, the firm said, adding: “Oilexco does not have any other source of funding at this time and has, therefore, concluded that an administration must be pursued.”
A Royal Bank spokeswoman said: “We continue to work with the company in order to secure funding for the administration process.”